The report, which has been published ahead of the passage of theDigital Economy Bill - which contains several clauses about the Government’s planned clamp down on web piracy, found that one in three people thought that using software piracy was satisfactory and were largely ignorant of the dangers involved – such as identity theft or virus attacks.

One in six people out of the 1,000 adults interviewed across the UK during February 2010, admitted using illegal computer programs at work or at home. However, only a third professed an understanding of the risks involved.

Microsoft’s “Attitudes to Piracy” study compared people’s attitudes towards film, music and software piracy and found that six out of 10 people said that they knew the least about the dangers of using pirated software as opposed to the risks which came with illegally downloading films or music.

“People need to understand that there are inherent risks to their own security, including identity theft, from using pirated software products and that they can often be the victim of other’s criminal actions, such as an employer using pirated software in the workplace,” said Susie Winter from the Alliance Against IP Theft.

The report also highlighted the consequences people have faced by using pirated software. It found pirated software to have led to an introduction of a computer virus in 62 per cent of cases, a loss of personal data in 31 per cent of experiences and caused a user’s computer to crash in 38 per cent of all cases.

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Of those surveyed, one in eight employed adults admitted to using pirated software at work. London was named as the UK’s piracy hotspot with 14% of people using pirated software in the office and 57 per cent of those polled believed their boss would consider the practice as acceptable.

“Businesses have many excuses for not managing software effectively. Cost cutting, ignorance and changes in IT personnel are often cited during legal action,” said Julian Swan, director of compliance marketing at the Business Software Alliance. “But the cost of being found using unlicensed software far outweighs any perceived savings. Businesses expose themselves to the risks of fines, reputational damage and data loss if they allow software to be duplicated or downloaded from illegal web sites. It may seem like a cost saving but it’s a likely cause of major regret.”

Michala Wardell, head of anti-piracy at Microsoft UK, added: “Microsoft decided to commission this research as part of its ongoing commitment to educate consumers on the risks of using pirated software. The Government’s Digital Economy Bill is a reflection of how serious the issue of piracy has become. As people continue to spend more and more time online, we think it’s important to ensure people understand the dangers associated with this type of activity so they can better protect themselves.”

Cyber attacks, such as spam emails and computer hacking, cost businesses around the world during 2009 an average of £1.2 million, according to a recent Symantec report.

The Digital Economy Bill, which is expected to be passed in the coming weeks, proposes a multi-step solution to internet piracy - which begins with warning letters to those caught illegally downloading copyrighted material and technical measures such as bandwidth capping, being imposed against repeat offenders at a later date.